Crypto mining with Solar Energy
- Elon Musk invested $1.5 billion in Bitcoin and a big spike has been seen in this digital currency. One of the reasons behind rising cryptocurrency use in transactions of varied nature is the way it is presented in the society. It is digital and exists in a database, where it is stored after being generated with the use of computing processors which require electricity to run. Geothermal power in Iceland and Hydropower has already been proven beneficial in crypto mining and solar energy can be beneficial for the same at locations where the sun shines well.
In past 12 years from the time of launch of Bitcoin, value of 1 Bitcoin has reached above $47000. With the rise in digital economy, artificial intelligence, internet of things and clean energy, we are moving towards a more paper less, labor less and emission less time. This is the demand of the present and the future with rapid globalization and exchange of things and ideas across the globe.
Cryptocurrencies and renewable energy sources like solar energy can be termed as advanced technologies developed with the rapid evolution of humankind on this planet. Mining digital currency with the use of solar power is a profitable venture if established with good knowledge and skill sets of both the technologies.
Use of renewable energy technologies for crypto mining is essential too, as a report in 2019 estimated carbon emissions from Bitcoin alone to be 22.9 million metric tons. These emissions are about the same as country of Jordan and Sri Lanka.
An astounding instance of crypto mining and renewable energy integration came from Layer1, when in summer of 2020 they reported 700% profit by selling electricity to the grid and not by crypto mining. This happened when the crypto currency miner powered down its processors for 30 minutes and the electricity was sold to the grid. The power prices at that time in Texas topped $200 per mega watt hour and the mining company earned a huge profit. Such and many instances and work performed by researchers and entrepreneurs depict the huge potential of mining crypto currency with renewable energy technologies. This not only will profit the miner with fruitful monetary benefits but also the environment with clean energy use for such operations.
Mining of decentralized digital currency or crypto currency
The times have changed a lot from barter system which was used to exchange things with one another to the centralized monetary system that came into existence with the banks providing a more streamlined way to perform transactions with fiat currency and representative currency. Now cryptocurrency, a decentralized way of performing transactions is spreading across the globe at good pace.
Cryptocurrency is a digital currency which is managed by blockchain technology. As it is an encrypted form of currency, it is impossible to double spend or be faked. It is the most secure way of transaction at present times. This blockchain technology is more of like a ledger which keeps all records of origin and transaction of cryptocurrency in a network of computers.
Mining of digital currency or crypto currency is done by solving complex math problems with the help of processing units. These can be central processing units of computers (CPU) or graphics processing units (GPU) and the latest application-specific integrated circuit (ASIC). These mining processors or miners are cryptocurrency specific and many are connected to each other to form a rig and collectively called as a pool.
These rigs of miners or mining processors use electricity to operate and extract cryptocurrency.
These mines also loose heat in the process because of intensity of work done by processing units as they consume electricity. This heat can be used as an energy source like Kamil Brejcha, the co-founder of NakamotoX exhchange disclosed use of mining heat for growing tomatoes in their 5 acre greenhouse. This byproduct heat can also be used to grow other vegetables or can also be used to heat homes individually or via a district heating network. Similarly, a Russian babushka reveals to BBC how she earns profit by a gifted mining rig from his son and also uses excess heat to dry local herbs in the wet Siberian climate.
These examples reveal how a crypto mining rig not only mines crypto currency but also delivers heat as a byproduct which can be used again, completing the energy cycle.
Energy consumption in crypto mining
At present Bitcoin consumes electricity more than that of Argentina. Mining cryptocurrency requires electricity and a lot of it. According to a Coinshares study about 78% of bitcoin miners use renewable energy sources as power source. There are a number of cryptocurrencies and their algorithms through which they are extracted with the use of miners or processors. The processors require electricity to run the algorithms and also do the same to verify it. Crypto mining is an energy intensive process and if we talk specifically about Bitcoin, it takes 72000 gigawatt of electricity to extract 1 Bitcoin.
The problems or hashes to generate one Bitcoin are getting tougher with time and more miners are joining to solve the problem and extract it. Sill it takes 10 minutes to extract a Bitcoin, the scale at which miners join to do the same and extract it enormous.
Considering the case of Bitcoin which is the foremost crypto currency mined and used at large scale compared to other digital currencies. Also assuming efficient hardwar as Bitmain Antminer S9- ASIC which requires 1323 Watt of power to run for 24 hours a day. It will consume 31.7kWh of energy in a day’s crypto currency mining operation. Based on the technical specification of Antminer-ASIC, it has capacity to mine 0.37 Bitcoin in a month. So this means, it takes atleast 3 Antminer-ASIC to mine 1 Bitcoin in a month. This results in 95.3kWh of energy for a rig’s operation with 3 Antminer’s per day.
Solar energy for crypto mining
The combination of solar energy and bitcoin mining is just perfect. Like for example Christian Ander, the founder of BTCX exchange in Western Europe is saving 75% in his mining costs by using solar energy powered miners. Through his twitter handle he expressed how mining bitcoins by solar energy is paying him 10 times more money than selling solar electricity to the grid.
Similarly Community Renewable Solutions founder Tam Hunt, in his work indicated major rise in bitcoin mining with the use of solar energy and also reduced energy consumption. His work also determines how bitcoin mining is more profitable by using solar energy as power source. In the same work, ROI for solar plus bitcoin business is claimed to be two years. As a backup plan provision to sell electricity to the grid is also an option. An off grid bitcoin mining farm with satellite connected internet, powered by solar energy with storage for 24x7 operation is a good idea according to Hunt. Like in 2018, Haduoken Pty Ltd was allowed to set up 20MW solar power plant with 68000 solar panels spread across 18 hectares of land space specifically to mine crypto currencies like bitcoin and ethereum.
Another similar work by Thomas Smith, revealed added 500% profit by using solar energy in crypto mining as compared to selling electricity to the grid via net-metering. Solar energy for mining crypto currency is taking a lead along other hydro power and geothermal power.
The crypto currency mining business means profit when cost of mining one block is less than the price of the block they extract. The cost of mining one block depends on the electricity consumed by the processor like ASIC or GPU or PCU. Among these crypto currency mining processors, ASIC is the most energy efficient.
To connect mining processor with the solar photovoltaic (PV) system the intermittency of solar energy has to be considered. The solar PV system cannot supply electricity to the mining processor continuously for 24 hours a day. For the best possible and sustainable design the solar engineers need to study the load how it consumes electricity. Battery backup or other energy storage devices like flywheels, pumped hydro storage, super capacitors and fuel cells are some of the options which can power the mining processors from the stored energy of solar PV system. If energy storage is not possible to run mining processors solely with solar energy then grid connected solar PV system is also a good choice. A grid connected hybrid system can cut down the costs of electricity in crypto mining with a battery backup for emergency.
The profitability of a solar powered crypto mining rig will be highest at a location where sun’s irradiation level is at maximum around the year and air temperature of that location is cold. This environment condition is best for the solar system and also the crypto currency mining rig.
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